A Blog of Members of the Administrative Law and Regulatory Practice Section of the American Bar Association

Monday, August 25, 2014

FTC Proposes Revisions to Energy Labeling Rule Requirements

by Elisabeth Ulmer

In June 2014, the Federal
Trade Commission (“FTC”) proposed a rule to amend its labeling requirements under
the Energy Labeling
Rule.The FTC intends “to expand
coverage of the Lighting Facts label, change the current label categories for
refrigerators, revise the ceiling fan label design, and require room air
conditioner labels on packaging instead of the units themselves.”

The Energy Labeling
Rule (“ELR”), formerly known as the Appliance Labeling Rule, was issued in 1979
under the Energy Policy and Conservation Act (“EPCA”).The EPCA may require labeling on products if
it is “likely to assist consumers in making purchasing decisions.”The ELR establishes requirements for consumer
appliance products in commerce, which is defined in the EPCA.Products must include, as applicable,
information about operating cost, water use, energy consumption, energy
efficiency, and energy cost.

The FTC first
sought comment on revisions to the labeling requirements of the ELR in a Notice
of Proposed Rulemaking (“NPRM”) in March 2012.In this NPRM, the FTC also recommended new labels to assist consumers in
comparing refrigerators and clothes washers.In the proposed rule, the FTC addresses the concerns of the public’s
comments on the NPRM and suggests other amendments.

For instance, the
FTC recommended requiring labels for more types of light bulbs, including all
screw-based bulbs and GU-10 and GU-24 pin-based bulbs.These labels would offer information about
energy cost, brightness, and bulb life.In the comments on the NPRM, some industry members were concerned about
fitting required disclosures on packages and lamps, and thus recommended
smaller labels and abbreviated content.The FTC proposes a smaller, single label option for certain specialty
use bulbs that come in small packages.This label would contain information about lumens, energy cost, and bulb
life, but not watts and light appearance.

Additionally, the
proposed rule discusses the potential of an online label database on the
Department of Energy’s website that will benefit both consumers and
retailers.Nevertheless, the FTC declared
that it would not abandon physical labels for now because “not all consumers
have online access, and not all those who do conduct online research before
making purchase decisions.”

In order to pursue
more durable labels for clothes washers, dishwashers, and refrigerators, the
FTC and commenters debated hang tags versus adhesive labels.Downsides of are that hang tags can easily
come loose, while adhesive labels can leave behind unwanted residue.The FTC ultimately decided to retain both
kinds of labels as options, but may require adhesive labels in the future if
the proposed improvements to hang tags do not sufficiently decrease the number
of missing labels.

For ceiling fans,
current labeling includes information on airflow, energy use, and energy
efficiency at high speed.However, the
FTC proposes that new ceiling fan labels highlight the annual energy cost
because, according to research on consumer preferences, energy cost is “a
clear, understandable tool” for energy performance comparison by
consumers.Manufacturers would have two
years to change their packaging.

Under the ELR, the
FTC did not require labels for clothes dryers because the annual energy cost
difference between models was only $5.Thus, the FTC determined that the costs of energy labels would “far
outweigh the potential benefits.”Currently,
according to Department of Energy tests, the annual energy cost difference
between electric models is at most $11.Thus,
the FTC maintains that labeling would not have much of an impact on consumer
choices, even taking into account the possibility of consumers using the energy
information to compare the different fuels in clothes dryers or to decide to
hang dry their clothes instead.However,
if more efficient dryers become widely available or if future testing methods
reveal higher energy cost differences, the FTC may then decide to require labels
for clothes dryers.

The comment period for this proposed rule closed on
August 18th.The FTC received no
comments and will publish
appropriate final amendments.